HOUSTON, Jan 31 (Reuters) - The United Steelworkers union (USW) and Shell Oil Co shook hands on a 3.5-percent pay increase for each of the first two years of an agreement reached on Thursday covering 30,000 refinery and chemical plant workers, said sources familiar with the deal.

Workers’ pay will increase by 4 percent in the final year of the three-year pact, the sources said. (Reporting by Erwin Seba in Houston Editing by James Dalgleish)